Member Info for Hexam

The UK share of CINE's revenue is actually around 20% but yes the results from Everyman are encouraging even though a lot of their growth compared to 2019 is due to them increasing the number of venues (from 28 to 37).

Nevertheless, another piece of positive news ahead of results, including the bit about 'higher average spends'.

https://www.lse.co.uk/rns/EMAN/trading-update-lf4x2msm80t3ohu.html

HC - Oddly enough I was looking at the sp of various miners yesterday and what stood out to me on the YTD chart was just how well CLSK has done compared to the others (MARA, ARBK, RIOT, CORZ, HUT8) particularly up to April. Yes, some others have come off their 52 week lows (a lot) but this may be just because they fell so much more in the first place and so have simply recovered more as BTC has rallied a bit whilst CLSK's large gains were not sustainable as BTC tumbled.

I don't know enough about the other miners to answer your question properly by explaining the cause and effect of relative sp movements and their timing but looking at the chart comparison what you described looks to have less to do with any very recent news and more to do with whatever has gone on before perhaps?

I think the green card is overplayed somewhat. It was being lauded as being a big differential over a year ago but has seemingly made no difference at all so far compared to other miners. Maybe you are right and it will in time but meanwhile I think its appalling mining efficiency and weak cash position means it is in a less healthy position currently than many other miners. The future may be indeed be bright but whether it can get there in one piece is debatable.

"compared to other miners argo is playing it smarter."

Would be interested to know why you think that. I reckon it's questionable at best. On the plus side:

- They could benefit significantly from immersion (but they're not the only ones doing this)
- They have a good facility into which they can expand
- Most of the first 200mW (apart from Intel) has already been funded
- Their running costs are quite low (though this is before the hikes in price in Texas due to weather)

On the negative side though:

- They have the worst mining efficiency by a distance (though the plusses above should help reverse this)
- They are in a very weak cash/HODL position, worsened by their loan exposure which is largely covered by assets reducing in value (BTC and machines). So they are more vulnerable than the likes of HUT 8 for example with large HODLs
- They have suffered power curtailments which have have reduced mining further and put the costs up and they are still some way off being able to offset any of this by joining the scheme that means that get payments in recompense

At best I think the above adds up to neutral compared to others?

Thanks Chae. I think though that you are confusing me with somebody else as I’ve never mentioned any qualifications before (and it’s not CFA).

You also need very specific qualifications to give financial advice, and I don’t have those so I steer well clear of anything that can be construed as such. That would definitely get me struck off…

Thanks FP. I try to keep any opinions fact based and am careful in what I say. But then again I have to be - or else I'd probably be struck off!

FWIW - as it happens I actually am a qualified finance professional with many years experience. Not that I think that means too much - remember Tiger the 'investment banker' :-)

Instead I think any post should be judged on its own merit rather than what letters someone has after their name or whatever they claim to be.

As to the question it very much depends on how much of the outstanding capex they are committed to spending - either because contractually they have to or because they simply want to. It seems they have at least some scope to defer the intel spend which would probably mean they could go for many months without raising (as they are close to break-even on a cash basis without any capex spend at the current monthly mining levels and BTC price).

However the large amount of BTC they've recently sold, including some to repay part of the galaxy loan to reduce margin and risk, suggests perhaps they are spending enough on capital investment to make things very tight and some kind of raise may not be too far away. Just my opinion though - professional or otherwise ;-)

Well it's been by far the best month of the year at the US Box Office where 75% of the revenue is - so no.

Desperate clutching at straws.

Fair enough. I read that slightly differently but see what you mean.

For avoidance of doubt convertible debt means you either pay back the original loan or it is converted into shares. One or the other (unless of course they go bust with no assets)!

Correct, though I don't think anybody was suggesting that they didn't have to repay the loans? Unless of course they are converted to shares instead.

Yes - it's either dilution or pay back and at the moment it's looking like pay back but the key is they got this loan at just 1% pa interest so looks a great deal to me. If I bought shares now I wouldn't complain about the sp being $76 and being diluted (I'd be out before then). Payback is of course a concern but it is way down the line and the terms are so cheap.
Fuller terms are below:

"On November 18, 2021, the Company issued $650,000,000 principal amount of its 1.00% Convertible Senior Notes due 2026 (the “Notes”). The Notes were issued pursuant to, and are governed by, an indenture (the “Indenture”), dated as of November 18, 2021, between the Company and U.S. Bank National Association, as trustee (the “Trustee”). Pursuant to the purchase agreement between the Company and the initial purchasers of the Notes, the Company also granted the initial purchasers an option, for settlementwithin a period of 13 days from, and including, November 18, 2021 to purchase up to an additional $97,500,000 principal amount of Notes, which additional Notes were purchased on November 23, 2021, for an aggregate principal amount of Notes purchased of $747,500,000. All references in this disclosure to “Notes” includes the Notes issued on both November 18, 2021 and November 23, 2021..

The Notes will accrue interest at a rate of 1.00% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on June 1, 2022. The Notes will mature on December 1, 2026, unless earlier repurchased, redeemed or converted. Before the close of business on the business day immediately before June 1, 2026,
noteholders will have the right to convert their Notes only upon the occurrence of certain events. From and after June 1, 2026, noteholders may convert their Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or
delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election. The initial conversion rate is 13.1277 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $76.17 per share of common stock."

What debt risk exactly? They are making good profits at the moment (since May) so servicing debt not really an issue going forward (even allowing for the court case). The fly in the ointment is the leverage covenant test as at 30th June on the RCF which they will breach and so they need a waiver or to refinance - but again their chances of being successful in this are much greater with the business now doing so well.

"Aren't we talking a potentially massive dilution further down the road when these are converted into shares?"

Potentially yes, but the sp has got to go up somewhat for the conversion to be attractive so effectively it is just a 1% p.a. interest paying debt at the moment. Smart move to issue these when their sp was riding so high.

"The initial conversion rate is 13.1277 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $76.17 per share of common stock"

I'd qualify it a bit more perhaps as:

'btc needs to rise fast to save those with the highest cash costs and least cash/HOOL to spare especially if their ability to raise more cash is limited'.

I agree the most indebted companies are more vulnerable in this respect as this adds to the current cash costs above (through high interest payments) but also lenders may (or probably will) get difficult if companies can't cover collateral including margins due to poor cash/HODL positions.

Unless BTC really crumbles I can't see it going down to 140EH as it still makes more sense for most miners to keep the power on (once past the hot weather issues) and many are still expanding inc. ARB.

I would guess at 225-275 EH by year end but it's only my finger in the air view. Lower though if BTC falls from here, closer to 300 EH if it recovers really well perhaps.

HC - All I can find for CORZ is "Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets." So no actual number but I know MARA use 5 years (used to be 2 years) and ARB 3 years. How these numbers compare to how long these machines actually run at or near full capacity I don't know (too early probably for even the miners to know for the new machines) but I would expect them to be reasonably prudent in the way they depreciate assets.

As to 300EH I think this may still be possible at the end of year as I think the current reduction in hashrate has more to do with temporary shutting off of power due to high (weather-related) power costs and/or giving power back to the grid. If BTC doesn't pick up soon though we could indeed see a more sustained drop in hash rate (or rather slower growth than was expected) as some miners perhaps pull back on expansion plans and others maybe shut down current production on a more permanent basis?

Chae - I don't think CORZ are bad on costs at all, actually I think they are one of the better ones but you are right they are more complex, as they provide other services (hosting plus 'equipment sales').

FWIW my take on their costs for Q1 is:

Direct Cost of Mining = $29.35m
Mining Share of Overheads = $16.2m (split broadly by relative revenue)
Interest = $21.7m (all allocated to mining)
Total Cash Cost $67.2m

Depreciation = $39.4m
Share Based Costs = $19m (some allocated to other services)
Non-Cash Costs = $58.4m

Total Costs allocated to mining = $125.6m

They mined 3202 BTC in Q1

So this gives costs per BTC mined:

Direct Only = $9.2k (lower than most)
Total Estimated Cash Cost = $21k (also lower than most)
Total Estimated Cost (inc non-cash) = $39k (comparable to most)

If anything I've allocated too much to mining (compared to hosting and equipment sales) so these may be toppy but I believe they still compare well with most other miners. Hope this helps rather than just confuses more!

OK - I've actually looked at his numbers a bit more and can confidently say now they are both confusing and wrong.

He talks about all-in cash costs but he also talks about direct cash costs. They are different though as all-in should include overheads and direct should not. What he is actually presenting in his graph are the direct costs NOT all-in cash costs. This explains why the numbers are so much lower than mine.

However, for CORZ he has included depreciation as well (which is why they are showing higher than others) and for HUT8 he has not converted into USD (their accounts are in Canadian dollars).

So he is not presenting all in costs at all but direct costs only just like the miners do - except he's made some mistakes which is why some appear higher than others.

I don't think I could make much on YouTube - I've got too much of a radio face :)

I really don't know how he struggles with Argo costs as from the companies I've looked at that it is by far the easiest as they don't have that many different costs and they are not complicated by other activities such as hosting.

From what he says he is presenting the all-in cash costs i.e. everything bar depreciation (though he should also be excluding share based payments too).

I've only looked at a few companies (CORZ, HUT8, RIOT, ARB and BITF). For all these companies I worked out the all-in cash costs per BTC mined in Q1 to be 20-$25k so very different to his numbers apart from CORZ. (Note he does NOT give the all-in cash cost for CORZ per BTC as $68k, instead the all in cost is $68m and they mined 3,200 so their cost per BTC is $21,478 i.e. it is the graph not the table where you need to look for his answers.) I don't know why my numbers are so different and though it may be mine that are wrong I am quite confident as some of his look crazy low e.g. his BITF number just doesn't make sense. Their electricity costs alone are around $10k per BTC (like most companies) and so this implies very little by way of overheads but this simply isn't the case. His MARA number also looks way too low but I haven't looked at them recently because of all their mining issues. His HUT8 numbers also look out of whack given the high cost base that is often commented about for them (again his cost is lower than I think their electricity only cost per BTC is).

FWIW my estimates for the all-in cash costs for Q1 per BTC mined were:

ARB - $24k
CORZ - $21k
RIOT - $20k
BITF - $22k
HUT8 - $25k

Whilst I am happy and confident these are in the right area please don't take my word from it and DYOR. Never trust a number anybody gives you unless you can see where it comes from yourself.

FP - To paraphrase another poster it will happen when it happens and that’s all the answer you need.

Btw - thanks for the funniest typo I’ve seen for a long time. I assume you meant ‘grid’? If not then I hope you cope with the load better soon whatever it is you are up to. Personally though I don’t wish to know any more detail :)